Publication: Malawi Economic Monitor, January 2025: The Rising Cost of Inaction
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2025-02-11
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2025-02-11
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Malawi’s economic recovery remains fragile due to the slow implementation of macroeconomic adjustment reforms and a series of recent shocks. Food insecurity remains a major concern due to weak harvests from 2022 to 2024 and the likelihood of a challenging 2024-25 season. Inflation is gradually easing but remains high due to rising food, housing, and utility prices, as well as the rapid growth of the money supply. Malawi’s banking sector remains highly profitable, as it benefits from government borrowing and high interest rates, but vulnerabilities are emerging. Despite high profits and apparent stability, stress tests reveal vulnerabilities. While the Reserve Bank of Malawi (RBM) has determined that Malawi’s banking sector could weather individual shocks, multiple simultaneous shocks can present a threat. Continued vigilance, risk management, and diversification will be crucial to reinforce resilience. This 20th edition of the Malawi Economic Monitor (MEM) finds that the cost of inaction is rising, as continued delays in addressing widening fiscal and current account deficits increase the scale of the eventual adjustment and heighten the risk of further deterioration.
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“World Bank. 2025. Malawi Economic Monitor, January 2025: The Rising Cost of Inaction. © World Bank. http://hdl.handle.net/10986/42788 License: CC BY-NC 3.0 IGO.”
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